we are at the last hour, if you lshg the last day for sure in dealing with what has become probably the biggest fiscal crisis that our country has dealt with in some time. >> no deal is better than a bad deal, and this looks like a bad deal the way this is shaping up. sfwlool right now on andrea mitchell reports, teetering on the edge. are joe bideern and mitch mcconnell close to striking an 11th hour deal to avoid falling off the fiscal cliff?

>> there are a number of issues on which the two sides are still apart, and negotiations are continuing as i speak. >> the vice president and i have worked together on solutions before, and i believe we can again. >> lawmakers work through the weekend. president obama went on "meet the press" to call out mcconnell and house speaker john boehner over tax hikes. >> i think it's been very hard for speaker boehner and republican leader mcconnell to know that taxes should go up as part of an overall deficit reduction. >> a health scare for hillary clinton. new details as the secretary of state undergoes treatment for a blood clot in a new york hospital. ringing in the new year. from sydney to new york city. the world turns the page to 2013.

good day. i'm chris live in washington in for andrea today. deal or no deal? as vice president joe biden and senate republican leader mitch mcconnell continue negotiations, we just have learned that president obama will speak about the fiscal cliff at 1:30 p.m. eastern time. with all that happening, let's get right to our daily fix. nbc's kelly o'donnell on capitol hill, nbc's kristen welker at the white house, and jonathan capehart, washington post editorial writer and my colleague and an msnbc contributor. okay, kelly. the action is on the hill where it's been for the last few days. let's start with you. this is a fast-moving story. give us the latest perimeters of what appears -- i emphasize appears to be the start of a deal. >> well, it has been coming closer together, so we are told. the question is what will the president be saying, and senior advisors here as well as senators i've spoken to say they do not expect that he is making any nounment of a deal, so we'll wait for the white house to determine that for sure. what we've been hearing is that they have moved off the issue of

taxes and have been more focused on the nature of spending cuts. with republicans and democrats in two different places. democrats would like to delay the automatic spending cuts that would kick in at midnight for two years. republicans would like to delay them only for three months, and then get some additional deaf set reduction with those cuts would kick in. the opportunity there is to then decide instead of across the board cuts, could they reach some agreement on more specialized cuts that both parties could live with. that's a very difficult thing to do, and something they can't do quickly. what we think there has been significant progress on is setting a rate at which taxes would go up, which would be around $450,000 to $500,000, and anything below that, rates stay the same. above it, there would be an increase. also some agreement -- we don't have the details yet on the inheritance tax or the estate tax. also steps to protect middle class taxpayers from what's known as the alternative minimum tax. interesting part of this whole

tax discussion is we are told that the tax decisions made would be permanent so that there wouldn't be one of these deadlines that would create another one of these crisises. that's an issue that we don't often see when lawmakers decide on taxes. there's usually an end point, so they have a chance to go at it again. we're told that permanent is the word of the day. we're also told anything could change as they get closer. lots of constructive conversation, i'm told. the vice president's involvement has been described as being very helpful because he understands how lawmakers think and has good relationships here. that's the latest as we know it. republicans plan to meet with their conference today if there's something to talk about. the president's plan to speak at 1:30 has taken some people very close to this by surprise. chris. >> kelly, i just very quickly follow-up, and then i want to go to kristen. tell me logistically if they agree on something, you know, in the next couple of hours, can we get this voted and passed in the senate, voted and passed in the

house, or are we almost inevitably kind of even if it's by a few hours going over the fiscal cliff at midnight? you know better than me the kind of inner workings of how this stuff goes? >> well, there are staffers ready to put any deal or handshake that might be agreed into legislative language? some pieces of that already exist. some would take time. think of it as writing a contract. the language is important. it needs to be specific. they need to commit to that. there would be people ready to do that. i was told earlier today that could take hours in and of itself. then let's say the senate were to meet to decide to pass it, and if they were able to pass it, then it goes to the house. we're being told that it might, in fact, be a case where the house would receive it, but actually cast a vote tomorrow on new year's day. the markets are not open. the affect of taxes would have changed. then it is, in fact, a tax cut season. not a tax increase season. again, those mechanics can be adjusted somewhat, but there are real practical elements that go beyond the political wrangling that will be dealing with if, in

fact, we get -- if we get a deal, and then it will be sort of a countdown to the clerical staff getting it done. chris. >> as anyone who has ever bought a house can atus to, it takes time just to sign your name to lots of documents. >> exactly. >> i want to go to you. you know, this news about president obama coming on at 1:30 p.m. came just moments ago. have you had a chance to do any reporting? do we expect, this doesn't sound from reporting like is he announcing the deal. what will he do? do we have any idea? >> my reporting mampz kelly's reporting. it does not appear as though president obama will be announcing a deal he will be speaking with middle class americans behind him, and he will send the message that if they do not act by john 1st, the average american will see their

taxes go up by about $2,000, and it could ultimately wind up hurting the recovery, could wind up ultimately sending the economy back into recession. those are some of the themes i expect him to touch on. there are a lot of discussions going on behind the scenes with the president. the vice president, of course, in close contact with mitch mcconnell. he was brought into these negotiations yesterday. mitch mcconnell says he needs a dance partner. mcconnell said that in negotiations when they had all but stalled. vice president biden brought into the negotiations engaged, and he really did, it seem, at this point help to move the negotiations forward. the vice president has more than 30 years searching in the senate. 23 of those along side senator mcconnell. he certainly are on all sides

are staying he has been a big help here, chris. >> as anyone who has ever sat in the senate gallery and watched relationships matter. it's a great point. kristen welker, kelly o'donnell. i will let you get back to reporting on this. >> i want to bring in jonathan capehart. let's talk about where we are. >> i have compared xwnk to a college student who waits until the absolute last minute and is tightening out the last words of their paper as they are running out the door to hand it in. that's probably an arcane comparison. i have dated myself. you get the idea. >> arcane, but apt. is there any way that congress moves forward? does anybody wind up looking good in this scenario? >> no. no one looks good in this scenario. not perfect ez. not the extending. not the house, not the senate. not senate minority leader mitch mcconnell. you have people around the

country today saying we send you to washington to solve the nation's problems, to do what we sent you to washington to do, which is to govern, and here we are with a countdown clock at the bottom, ten hours, 51 minutes, and 34 seconds to get something done that should have gotten done, could have gotten done months ago. a lot of people are scratching their heads wishing, hoping that, you know, at some point congress will get et cetera act together. we do have a new congress coming back in. we keep talking about the so-called fiscal cliff. there are consequences for inaction if that countdown clock gets to zero and there's no deal and no deal has been reached. >> jonathan, thank you. to your point, it's remarkable to me that what we're debating is exactly what we were debating six months ago. it's not as though something has happened recently. this is the debate we've been having or the debate we haven't been having making it all the more remarkable that we have a countdown clock for it. thank you.

>> that's right. >> a deal on the fiscal cliff may be at hand, but there's still a lot to do, and not a lot of time to do it. delaware democratic senator chris kuhns. thank you for taking the time. i want to talk about something first that your colleague tom hashi harken said on the senate floor. let's come back and talk about it. >> it looks like all of the taxes will be made permanent, but all of the other things that the middle class and america really depends on. one year or two years at the most, but the tax system is made permanent. well, i just think that's grossly unfair. grossly unfair. as i have said before, no deal is better than a bad deal, and this looks like a very bad deal the way this is shaping up. >> so, senator kuhns, is $400,000 on individuals a bad

deal as tom harken described, it or is some deal better than no deal at this point? >> well, first, let's just talk about our broader values and the context we're operating in. given the real financial strains on our federal budget, given divided government where the house is controlled by republicans, the senate by democrats, every deal that we can actually reach and enact is going to be a bad deal from our perspective. we're going to have to give many some way to get a deal of some kind. in my view if we can enact a deal here today that will give more than 8% of americans of families and small businesses confidence about their tax rate going forward, by only raising rates back to the clinton era on income above $400,000, that is a positive thing. the point that senator hashingen is making is that the revenue raised by doing that ought to be put to some positive purpose that invests in the american economy or that provides some support and security to the middle class. the shorter term extensions that are being talked about in what is rumored to be a deal, one

year extension of unemployment insurance, for two million americans, and extension of the earned income tax credit with a college tuition tax credit or the alternative energy tax credits are things that i value and democrats value. the one piece of this puzzle that is rumored to be permanent is a patch to the so-called alternative minimum tax or amt. that would protect the middle class folks making $40,000, $50,000 range from being hit by that tax, which is really not often discussed in what i'm seeing in terms of media coverage. it is a very complex menu of things, chris, that we are debating and discussing here in the senate and the house. it is my hope that we can follow senator harken's core value which is to make sure that revenue raised is being invested in a way that protects the middle class and strengthens our economy. >> senator, let me ask you. i want to go a little bit broader. you were an executive prior to coming in the senate. you elected to the senate in 2010. you haven't been there all that long. certainly compared to everyone else there.

are you surprised, amazed? what is your read-out that we are where we are on this? i'm looking at the clock. 10:47:50. the fact that we have a countdown clock for something that has been months in the making, what does it say about the senate and the house and congress's ability to tackle big issues, and if the american people are skeptical about that very thing, do they have a right to be? >> yes. absolutely. the folks who i hear from, delawareans who are calling me, e-mailing me, sending me responses to a position paper, a white paper that i put out on the fiscal cliff weeks ago, uniformly say why can't you all get along? why can't you reach a reasonable compromise? delaware's political culture is one where we pass balanced budgeted on time every year at the city, county, and state level. unlike many other states where they have months and months of wrangling passed their constitutional deadlines.

ours is a representative system. the house and the senate is made up of members who have been represent -- they've been elected, and they represent the districts that they're from. part of our challenge in tackling the significant unaddressed deficits and entitlement challenges and the needs -- the investment needs we have to strengthen our economy and to protect the middle class, part of our challenge in dealing with these core issues is that we are increasingly elected, particularly in the house, from states where the only risk of losing re-election is from a primary to the right or to the left, and we have fewer and fewer folks here who are consensus builders and centrists. in the long-term, that's going to make it harder for us to do the very difficult work of confronting the economic and the demographic challenges that are driving our budget problems here in washington. >> senator, that's an incredibly important point. thank you for making it, and thank you for your time. >> thank you, chris. even if the senate does come to an agreement, it's important to remember that any bill still

has to get through the republican controlled house. for that perspective, we're joined now by georgia republican congressman jack kingston. thank you for taking the time on what i know is a very busy day. tell me -- let's talk mood, first of all. ten days ago, two weeks ago the house republican conference very much in the news. a bill -- the so-called plan b could not be brought to the house floor because it lacked the votes. where is the house republican conference now in their mentality on making a deal on the fiscal cliff, and is there reason for optimism if something does get produced from the senate sometime today? >> you know, i think there is reason for optimism, first of all, because, chris, you have to remember, we actually passed as part of our budget in the spring an alternative to this possess. we did another such bill in august, and then before we left prayer to plan b, we passed a third bill, so we're glad to see the senate move, and when they do, we'll have something to sink our teeth into. we might not necessarily accept it as-is. there will be some amending, i

suppose, lots of debate, but i think that the house is ready to act. the difference between a senate proposal now and plan b last week is that this time we will not need to pass it only on republican votes. we'll have democrats who will be moving forward, and so i think you'll get a vote. >> let me follow-up on that, because i think it's an important point. john boehner's speakership took a hit. you can debate how big or how small. he put a lot of weight in his political backing behind plan b and couldn't bring it up for a vote. can john boehner bring a senate passed bill to the house floor that does not have a majority of the republican majority who will vote for it and sort of retain his power as speaker? what's your assessment on that? it seems very unlikely at this point that a majority of the 234 republicans are going to be voting for anything that the senate produces. >> well, i think that republicans will realize that the speaker has done everything

he can, and by not supporting plan b, they set up kind of a high pressure hold, if you lshgs of expectations. however, remember, that was the majority of republicans. if you had the democrats voting on a new alternative from the senate, then you only need, say, 25 or 30 republican votes, and you'll get enough. the reason why is because people will say, you know, we've made the case to continue the current tax rates as is. we did not win on that. now do we want to say, well, everybody is going to get a tax increase, or we're going to save the tax rates for some, and i think most people are at least 30 to 50 will say, you know what, let's take what we can get and live to fight another day. therefore, you'll get a bill passed. >> congressman, last question. did the republican skrort in the house and the republican party more broadly, but specifically the republican party in the house make a mistake that we will in retrospect view as a big mistake in not passing plan b in your estimation? >> no, i don't think so, because, again, plan b was one of four attempts to get the senate to move. we passed something in may.

we passed something in august. we passed something two weeks ago. the senate did not move on any of those, but now apparently they will. so what we've been doing all year long is waiting for the senate to act, and so with plan b failing, at least it forced the hands that the house has gone as far as it can go. no moralitytives for us. guys, you've got to get together. harry reid and mitch mcconnell. that seems to be what's happening, although vice president biden has stepped in because reid can't hold his group together. >> republican congressman of georgia, jack kingston. thank you for your time. >> thanks, chris. president obama will be making a statement on the fiscal cliff moments from now at 1:30 eastern time. stay with us for live coverage of that. next, an update on secretary of state hillary clinton's health scare.

minutes from now medicine prez obama will make a statement about the state of the fiscal cliff negotiations. stay with us for live coverage of it. meantime, secretary of state hillary clinton is under observation at new york -- at a new york city hospital today. her spokesman says she was admitted sunday for a blood clot stemming from the concussion she sustained during a recent bout with the stomach flu. nbc's chief science and health correspondent bob bazell is at new york presbyterian hospital where secretary clinton is being treated. bob, i know this is a story we're all keeping a very close eye on. what's the latest? we know she has a blood clot that came from -- they say from the concussion. we know it's being treated with anti-coagulant drugs. a lot of doctors are puzzled by that series of events because most blood clots that come from a concussion would be in the

brain, and they would not be treated with anti-coagulamt drugs. we don't know where it is or what her condition is. there's been no report about what her health status is other than she's under observation for these two days. there's a lot of puzzles here. a lot of people are hoping for the best, but clearly somebody doesn't come into the hospital over -- in the holiday berd just for a routine check-up, so something is going on. we hope to hear more, and we hope to see that she gets out of here in good shape pretty soon. we really -- i wish i had more informati information. the state department is being pretty closed-mouthed about this. >> we're awaiting a statement from president obama. there is the podium from which he will speak. stay with us for live coverage of that event soon on an drea mitchell reports. so if you're one of them people who gets heartburn

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>> minutes from now president obama will make a statement on the status of the fess cal cliff negotiations. this is as vice president joe biden and senate republican leader mitch mcconnell are reportedly inching closer to a deal. joining me now to talk about all that is politico's editor in chief john harris. john, just to start, nbc's white house reporter kristen welker says this is not obama nouning that a deal has been reached. >> he is trying to keep the pressure on with the deadline just hours away. he is going to emphasize his message that he has had all along about they need to get a deal that protects the middle class. i may even hear talk that there might be middle class families with him as kind of a stage -- not to say stage propz, but -- >> way to drive the point home. so let's talk about -- with the acknowledgment -- it's hypothetical, but let's talk about the fact that the reporting from nbc now suggests that anybody that makes above $400,000, individual, and $450,000 as a family will see their taxes go up to the 39.6%

rate. everybody below that will retain the tax cuts put in place in the bush administration. is that a good deal for democrats who certainly seem -- i would -- from my political analysis, after plan b went down in the house ten days ark that they had all the cards to play here. >> well, they certainly felt that they had all the cards. >> certainly. >> this is not what they would have envisioned victory looking like in that they assumed they had all the cards. a number of democrats in the senate, particularly more liberal democrats, clearly expressing their discomfort that this would be a deal, and, of course, there's a lot of conservative republicans that aren't going to like it either. yes, if we end up -- if this ends up being the deal that goes through, a lot of people will find it kind of like kissing their sister. not that satisfying. >> talk to me broadly about congress. you have covered this longer -- you've covered the political congress longer and you have covered it better than almost anyone. what does it say that we are where we are in this process?

is this just kind of the most recent thing that always seals line the worst? that is, congress has always been somewhat dysfunctional and a compromise comes hard, or are we in a worse place now than we have been? i just think about the debt ceiling. we're going to get a grand bargain on debt and spending like this. that doesn't look to be the case. we're going to get a patch that gets us at some distance down the road. can congress do beg or even medium things anymore, and is that a new trend or not? >> well, it's a culmination of a trend, obviously, that's been taking place for a generation. the answer seems to be no that given the current climate in washington, dwichb the idealogical complexion within both parties, there's really not

the incentive for a grand bargain. in the absence of that, what you have is apparently deadline improvization to just get past this crisis, but do no more than get past the crisis. >> although people say they want this grand bargain, but you say what about we do this and this and this. maybe people want small. i want to talk about most people come out of this -- most people who are involved probably come out of this not looking that great. one person getting good press today at least is joe biden. what is the sort of biden role here? this is a guy who spept ayalon time in the senate. he is seen as now he is brokering it and is the dance partner mitch mcconnell wanted. what does that mean for biden as we move forward? this is someone that has thrown his name out for a 2016 candidate. >> he is throwing his name in, and other people are throwing him out. >> i would say both. i would say joe biden is certainly much more than andrew

cuomo and hillary clinton certainly putting their names out. joe biden is saying, yeah, 2016. maybe. >> he is not going through the ritual of saying -- he is clearly it does interest me. it's hard to -- i would separate this from presidential politics. as hard as that is for somebody like us. >> come on. it's tough. i do think this represents the fact that at the end of the day particularly in your intense dead looirn situation personal relationships do matter. two men that have been in the senate and know each other. i don't know of if i particular affection, they know each other and they know what makes the other tick. they know what the other incentives are. the personal relationships can matter. there's no question. i think it will give sort of credibility to joe biden's standing, and they will show the value of that kind of institutional knowledge and seniority. >> they say it's the deal and it's the program meter is 450,000 with an extension of the patch in amt and extension of unemployment benefits and all these sorts of things. are both sides able even if they're not right to do so? are both sides able to declare

victory, and it so, what's the one thing they hang their hat on? >> i think i would be surprised if there's a lot of spiking. i think they'll be saying look at the circumstances we had. don't judge this against some ideal of what a deal would look like. judge this against the alternative which was the swan dive over the cliff, with all the uncertainty. i think the two sides will say, look, we did raise. to 450,000. >> basically the only way you have to have a talking point for each side. i want to bring john with me. i want to bring in maryland democratic congressman elijah cummings as we await the president. there is the podium as we await him to speak on the fiscal cliff negotiations. toiptd bring you in. you've heard some unhappiness among liberals that sometimes no deal is better than a bad deal. let's say that we're talking about a $400,000 and above --

>> my constituents are concerned about this cliff. we're going to make sure that they want to make sure we don't go over the cliff, and there's another thing that they're concerned about. the fact is that i think we have to look at the total deal. a lot of us are waiting to see exactly what vice president biden and senator mcconnell come up with. >> now, congressman, i have reporting in from nbc right now that has senior republican sources saying that the tax

portion of a deal on the fiscal cliff has been agreed to with the sequester. essentially the automatic cuts. the date with those going into effect still being the sticking point. republicans wanting shorter, possibly three months. democrats hoping for longer. maybe two years. how much does that factor into your calculation of whether you vote for this bill or not? when those automatic cuts design to sort of be the sort of thing hanging over the congress's head. how important is that to you when we see what the senate and if the senate but what the senate produces? >> sure. those cuts are very important. i mean, when you talk about 8% discretionary spending cuts, that's major, and it hits our constituents pretty hard. if they're talking about a temporary halting of the sequester, perhaps that maybe a good thing. of course, like to see it longer than three months. i'm just hearing this.

mying 20 give taxpayers a break. people want us to get this thing done. if we have to delay to continue spending. that, of course, is all connected with job creation. certainly i would love to see just sequester held off for a yoer or two, but i think we have to, again -- we have to look at the total deal. i think basically what we're doing here in the house, the democrats at least we're kind of holding our powder dry just to see exactly what comes up. >> right. john, let me turn to you because the congressman made me think of a point here, which is barack obama is now the only politician in america -- or at least the only prominent politician in america involved in these negotiations. that doesn't ever have to worry about being re-elected. this is two terms, and he is done.

how different are they from democrats in the house and senate who still retain a majority? do you see -- you obviously wrote an outstanding book about bill clinton and how he used the democratic congress to sort of position himself in the middle and them on the left. do we expect something like that, obama, the deal maker, obama the praying mattist, to use democrats in the congress in that way, or not? >> i don't see their incentives as being that much different. i do think that president obama, the leader of the democratic party, really has the leverage. i don't -- i expect that if there is a deal, that democrats don't like, you'll hear grumbling from the democrats, but i would be very surprised if you hear outright revolt. what democrats in congress want is more money. that's what president obama is facing. a full second term of under very constrained circumstances. he wants more rev new. i think he also wants, as much as he feels like he has that

sword over republicans, the fact is if the economy goes into recession, that is going to affect the prospects for a successful second term for him and n a profound way. >> congressman cummings, if i still have you, i'm interested in your take on this. i think some friction between even a democratic controlled white house and a democratic controlled house or a democratic controlled congress, there is some friction built in, whether it's a democrat, a democratic republican or a republican. mostly privately they said he didn't listen to us and care about the house. never searched in the house. how open are the liens of communication on the fiscal cliff between house democrats, yourself, leader pelosi, and the white house, whether it's president obama or vice president biden or senior level staff that you feel as though what you guys want and need politically and from a policy perspective is being listened to? >> i can tell you it's absolutely no doubt that the president is listening to us. i think we have better communication than we had last

time. i think those communications are very good. of course, there are many of us that disagree on the chain cpi, that is the cost of living with regard to social security. the president talked in his talk on another show yesterday about being open to that. well, there are a lot of us that are gents that because we realize that many of our constituents who have -- who are on social security all they have is that social security check. $15,000 to $16,000 a year, and then we also, of course, were concerned about with regard to medicare making sure that the aids did not go up. that's apparently -- both of those issues are not now part of this, but i can tell you, it's because the president stood up. he listened to the democrats who are on our side, and he has been very, very strong on that. as a matter of fact, speaker pelosi -- leader pelosi spoke about that yesterday, how impressed she was with the stand that the president has been taking. >> maryland democratic

congressman elijah cummings. thank you for taking the time. >> happy new year. sdhoo thank you, sir. >> i want to bring back kristen welker at the white house. let's talk john harris and i, as you are, and as the rest of the political word is waiting. we expect president obama to step to that podium and speak on the fiscal cliff. any more indication of what he will say, kristen, and if we are -- i've been using the word inching towards a deal -- have we inched across the line, or are we not there yet? >> i don't think we're quite there yet, but i am being told by my sources that they are feeling more optimistic at this hour. having said that, president obama is not going to announce a deal when he speaks in just a few minutes. this is going to be a part of president obama's sort of larger public campaign to pressure congress to get something done. i am told that he will be speaking in broad strokes about why he wants congress to act before the 1 st. of course, that's just a few

more hours at this point in time. he will likely talk about the fact that middle class americans will see their taxes go up by about $2,000 if congress fails to act. the tact fact that the economy is in a state of recovery, and if we go over the clifr, if those tax hikes and spending cuts kick into effect, that could really harm the economic recovery. now, this is coming, though, as really the contours of a deal are emerging. one of my sources here at the white house tells me that the tax portion of this has been finished. has been agreed upon. essentially what you just talked about, chris, which is that taxes will go up on individuals making $400,000. couples making $450,000. that that's locked in, and they'll go all the way back up to the clinton era levels. that 39.6%. as well, they have dealt with the estate tax, which will inch up a little bit. that going up from 35% to 40%. they're also going to extend unemployment insurance benefits and as kelly o'donnell has been reporting all day, the major sticking point remains the

sequester. what do they do about it? democrats want to see it staifed off for about a year. they want to pay for it with new revenues. from taxes, republicans want to postpone it for about three months, and they want it to come from cuts. that's really what they're trying to do. we're hearing from some folks in the house who are resistant, by the way, to what democrats are proposing and saying, look, it's just not going to pass through the house. there are still some important big issues to be worked through, so there is no deal at this hour, but president obama has sort of been launch this public campaign for a couple of weeks now really going out talking to the public. of course, did he that interview with david gregory this weekend. pressuring congress to act. chris. >> and kristen, if the sticking point, as you already suggested, the sticking point is when do these automatic cuts, the sequester, as it's called, and inside washington speak, whether do the cuts go in? do we expect president obama to say anything about that specific issue, or is this kind of a broad strokes we need to get

this plan done, month specific urgings to congress? >> well, the one thing i would say is that this has been so fluid. not only the negotiations on capitol hill, but how the white house -- how the president has been responding. the president planning to speak in broad strokes. could that change within the final few minutes before he gets to that podium? it certainly could. these negotiations are so fluid. at this point in time i am told that this is really going to be more of a pr event. president obama standing there with middle class americans standing behind him to make the case that actual people will be impacted if congress fails to act in this instance. now, one important theme throughout these entire negotiation that is we've talked about, chris, is that if a deal emerges too soon, it could essentially be spoiled. it could be derailed by a lot of people coming out against it. that's, in part, why congress waits until the 11th hour to get these big things done.

that is what we are seeing happen here in this case. we are certainly in the 11th hour. potentially the 12th hour at this point. >> government at its finest. i think that's in the government 101 class. wait until the last possible minute. thank you, kristen. as you can see, folks, if you are looking at the screen, these are, as john harris mentioned, earlier who is still with me, these are what we believe to be middle class americans that president obama will speak in front of. we are within literally minutes. we believe we have the two minute warning here on the president, so we expect him to be out soon. john, just quickly, because we are close here, kristen mentioned pr campaigns. the president, as you say, campaign style approach to this entire debate different many some ways than certainly economic stimulus, and a little bit different than health care. is this lessons learned from those two fights? >> i think it's partly that, and i think he has learned, look, he has public leverage, but he doesn't necessarily have private leverage. he doesn't have republican votes in the house.

you use what weapons you have as a president, and the public leverage and the power of his pulpit is one of his strong assets in this particular confrontation. >> do you buy the republican criticism that the campaign is over and the idea of campaign style events is unseemly, which they have put out there? >> i don't -- >> i think the presidency is a political office at any time during campaign season and in govrping periods. >> for good and for bad. zoo can't get away from the politics of it ever, and why not embrace it when you can? it's interesting, though, because i do think the president seems to be struck by the resistance both to the stimulus and to health care. by the time they got out to try to win the message war, they had already lost it on both of those. >> he felt by the power of what he thinks are very reasonable arguments and an accommodating personality that he would get harmony in washington. i think he has long since been disabused of that, and recognized that he is governing in a state of partisan warfare, and he is acting accordingly.

>> does he win here if we get any kind of deal? is this a ultimately chalked up in the win in the history books. let's not talk about the moment. when history is written, it this barack obama learned his legislative weapons? >> i think this is likely to be a short-term deal. it will not loom large historically. if he can end and say look, i dealt with the long-term fiscal issues and the country to that would be a more impressive achievement. >> you saw just to break in here, you saw the president's remarks being placed on the page, and here is the president himself to talk about the fiscal cliff. we'll leave it to him. >> happy new year to you. good to see you. hello, everybody. thank you. please, everybody, have a seat. well, good afternoon, everybody.

>> good afternoon. >> welcome to the white house. >> thank you. >> thank you for having us. >> now, i realize that the last thing you want to hear on new year's eve is another speech from me, but i do need to talk about the progress that's being made in congress today. for the last few days, leaders in both parties have been working toward an agreement that will prevent a middle class tax hike from hitting 98% of all americans starting tomorrow. preventing that tax hike has been my top priority because the last thing folks like the folks up here on this stage can afford right now is to pay an extra $2,000 in taxes next year. middle class families can't afford it. businesses can't afford it. our economy can't afford it.

now, today it appears that an agreement to prevent this new year's tax hike is within sight, but it's not done. there are still issues left to resolve, but we're hopeful that congress can get it done. but it's not done. so part of the reason that i wanted to speak to all of you here today is to make sure that we emphasize to congress and that members of both parties understand that all across america this is a pressing concern on people's minds. now, the potential agreement that's being talked about would not only make sure that taxes don't go up on middle class families, but it also would extend tax credits for families with children. it would extend our tuition tax credit that's helped millions of

families pay for college. it would extend tax credits for clean energy companies that are creating jobs and reducing our dependence on foreign oil. it would extend unemployment insurance to two million americans who are out there still actively looking for a job. i have to say that ever since i took office throughout the campaign and over the last couple of months my preference would have been to solve all these problems in the context of a larger agreement, a bigger deal, a grand bargain, whatever you want to call it, that solves our deficit problems in a balanced and responsible way that doesn't just deal with the taxes, but deeldz with spending in a balanced way so that we can put all this behind us and just focus on growing our economy. >> with our congress that was too much to hope for at this time. maybe we can do it in stages.

we're iffing to solve this problem instead in several steps. last year in 2011 we started reducing the deficit through $1 trillion in spending cuts. the 2k50e8 we're working on right now would have americans pay -- so that would add additional hundreds of billions of dollars to deficit reduction. that's progress, but we're going to do need to do more. keep in mind, just last month republicans and congress said they would never agree to raise tax rates on the wealthiest americans. obviously, the agreement that's currently being discussed would raise those rates and raise them permanently. >> but keep in mind we're going to still have more work to do. we still have deficits that have to be dealt with. we're still going to have to

think about how we put our economy on a long-term trajectory of growth and how we continue to make investments in things like education, things like infrastructure that help our economy grow. keep in mind that the threat of tax hikes going up is only one part of this so-called fiscal cliff that everybody has been talking about. what we also have facing us starting tomorrow are automatic spending cuts that are scheduled to go into effect. keep in mind that some of these spending cuts that congress has said will automatically go into effect have an impact on our defense department, but they also have an impact on things like head start and so there are some programs that are scheduled to be cut that we're using an ax instead ax instead of a scalpel. may not always be the smartest cuts and so that is a piece of business that still has to be

taken care of. and i want to make clear that any agreement we have to deal with these automatic spending cuts that are being threatened for next month, they have to be balanced. my principle is to do things in a balanced, responsible way and that means that revenues have to be part of the equation in turning off the sequester and eliminating the automatic spending cuts as well as spending cuts. now, the same is true for any future deficit agreement. obviously, we will have to do more to reduce the debt and deficit. i'm willing to do more but in a balanced, responsible way. for example, i'm willing to reduce the government's medicare bills by finding new ways of reducing health care costs in this country. that's something that we should all agree on. we want to make sure that medicare is there for future generations. but the current trajectory of health care costs is going up so

high we've got to find ways to make sure that it's sustainable. but that kind of reform has to go hand in hand with doing some more work to reform our tax code so that wealthy individuals, the biggest corporations can't take advantage of loopholes and deductions not available to most of the folks up here, aren't available to most americans so there's still more work to be done in the tax code to make it fairer even as we're also looking at how we can strengthen something like medicare. now, if republicans think that i will finish the job of deficit reduction through spending cuts alone and you hear that sometimes coming from them, that sort of after today we're just going to try to shove only spending cuts down, you know, well -- shove spending -- shove spending cuts at us, that will

hurt seniors or hurt students or hurt middle class families without asking, also, equivalent sacrifice from millionaires or, you know, companies with a lot of lobbyists, et cetera. if that they think that's the formula, they have another thing coming. we have to do this in a balanced and responsible way and if we're going to be serious about deficit reduction and debt reduction then it's going to be a matter of shared sacrifice. at least as long as i'm president. and i'm going to be president for the next four years, i hope. so, so anyway, for now, for now, our most immediate priority is to stop taxes going up for

middle class families starting tomorrow. i think that's a modest goal that we can accomplish. democrats and republicans in congress have to get this done. but they're not there yet. they are close but they're not there yet and one thing we can count on with respect to this congress is that if there's even one second left before you have to do what you're supposed to do, they will use that last second. so, so as of this point it looks like i'm spending new year's here in d.c. it's -- you all are going to be hanging out in d.c. too. i can come to your house? is that what you said? i don't want to spoil the party. >> you are the party. >> but the people who are with me here today, the people who are watching at home they need our leaders in congress to succeed. they need us, they need us to

all stay focused on them. not on politics. not on, you know, special interests. they need to be focused on families, students, grandmas, you know. folks who are out there working really, really hard and are just looking for a fair shot and some reward for that hard work. they expect our leaders to succeed on their behalf. so do i and so keep the pressure on over the next 12 hours or so. let's see if we can get this thing done and i thank you all, if i don't see, if i don't show up at your house, i want to wish everybody a happy new year. thank you very much. all right. that was president barack obama speaking on what he says is an insight deal on the fiscal cliff but not a final deal.

a lot of cheering. felt like a campaign-ish rally. we're not just doing on the spending side anymore but clearly an obama optimistic about this deal. its chances and what it means for the white house. that does it for this edition of "andrea mitchell reports." happy new year, everyone. "news nation" is next.

hello there, i'm t.j. holmes. president obama speaking just moments ago and putting the pressure on. with just ten hours until the country goes over that fiscal cliff, the president announcing that agreement to prevent tax hikes for all americans is in sight. but there is no deal just yet. >> today it appears that an agreement to prevent this new year's tax